Irish fear 'dangerous' contest for Brexit jobs

Ireland fears some rival countries are using lower regulatory standards to lure financial jobs moving as a result of Brexit.

Financial Services Minister Eoghan Murphy raised the concerns at a meeting with European Commission vice-president Valdis Dombrovskis, the Department of Finance confirmed last night.

Its understood the single banking regime in place across the EU means there is less scope for countries to try to curry favour with banks by offering lighter-touch regulation.

However, that’s less true when it comes to insurance, funds and markets. Last week, US insurer AIG opted for Luxembourg as its EU base, over Ireland, despite showing an earlier interest in coming here.

There is no suggestion Luxembourg offered sweeteners to win it around, but it shows long-term decisions are already being made about post-Brexit locations, even before UK Prime Minister Theresa May formally triggers the exit.

AIG said its move was driven by Luxembourg’s role as an EU founding member and its closeness to continental markets.

“Other cities in Europe are being very aggressive in trying to win business,” Eoghan Murphy told Reuters yesterday, warning of “dangerous competition”.

Ireland raised fears that a race to the bottom to win jobs risked undoing the tougher regulations brought in across Europe after the crash.

The Central Bank has been surprised by the high level of interest from firms looking at potentially moving here as a result of Brexit, outgoing deputy governor Cyril Roux told a meeting of the Central Bank Commission, which oversees the regulator, in January.

“The levels of interest were larger than had been initially anticipated,” the Commission was told, according to minutes of the meeting published yesterday.

At the same meeting, Governor Philip Lane said the Central Bank had consistently set out its position on applications for authorisation.

Any firm looking to be licensed here needed to satisfy authorities that the “risks associated with the business of the entity were governed, remunerated, managed and mitigated in, and by, that entity”.

Yesterday, the Central Bank Director of Credit Institutions Supervision, Ed Sibley, echoed Eoghan Murphy. Irish regulators were working hard to ensure that there is no regulatory race to the bottom in the search for the “crumbs of comfort that are falling from the Brexit plate,” Mr Sibley said.

Two of the world’s biggest banks have signalled their interest in coming here.

Bank of America sees Dublin as its “default destination” for a new hub inside the European Union if Brexit costs the UK its easy access to the single market, said Nikolaus Naerger, who heads its corporate banking in Germany, Switzerland and Austria.

Bank of America already has a operations in Dublin, which is why it is the default option, Naerger said.

And Bank of China has confirmed a presence here — the Central Bank has said a branch of its UK arm has been cleared to operate here.